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Oil has surged to its highest level of the year and commodities enjoyed a storming rally amid hopes the world's 20-month price rout is nearing an end.

Forward prices for Brent crude hit $40.22 in Monday's trading and have now recovered more than 50pc of its value since slumping to a 12-year low in January. West Texas Intermediate has gained more than two fifths at $36.57.

The recovery has been driven by renewed optimism that major oil-producing nations are edging towards a supply cut for the world's flooded markets. Weakness in the US dollar has also supported prices, which last hit $40 a barrel on Christmas Eve.

Traders are now betting on a sharp price reversal as US shale producers cut back...